Aave proposes Aave V4 loans against Bitcoin held with Anchorage

Aave Labs is seeking approval to deploy an isolated Aave V4 lending market that would let institutional borrowers borrow stablecoins against assets held with Anchorage, according to a governance proposal.

The structure is designed to connect regulated custody with onchain lending without requiring borrowers to move their collateral out of custody. Anchorage would retain the assets, while Chainlink’s infrastructure would synchronize the custodian’s records with Aave.

Under the proposal, the custodied balance would be represented onchain by a Custodied Collateral Token, or CoCT, which would function as an accounting unit rather than a tradable token or direct claim on the underlying collateral.

Chainlink’s CustodySync would control the minting and burning of CoCT and reconcile its supply with the collateral balance reported by Anchorage. Chainlink would also provide Proof of Reserve and price-feed infrastructure and synchronize loan lifecycle events between the custodian and Aave.

Aave V4’s Hub-and-Spoke architecture would allow the program to operate in an isolated environment, the team stated. A dedicated Hub would provide stablecoin liquidity, while a dedicated Spoke would accept CoCT as collateral and draw liquidity from the Hub.

The isolation would prevent the custodied collateral market from creating exposure to reserves on other Aave Hubs, while Aave DAO governance would retain control over listing decisions, borrowing caps and other risk parameters.

The proposed loan lifecycle would cover borrowing, repayment, collateral additions, margin returns and liquidation through the CustodySync bridge. Stablecoins would be transferred atomically to the borrower when a loan is initiated, while repayments would reduce debt without automatically releasing collateral.

If a liquidation occurs, Anchorage would conduct an OTC sale of the underlying collateral and use the proceeds to settle the Aave position. Partial liquidations would also be supported.

The initial proposal would list one CoCT representing Bitcoin held in Anchorage custody, while future borrower positions could use the same architecture. Final risk parameters have not yet been set and would be recommended by Aave’s risk service providers before an AIP.

If the ARFC gains community support, the proposal would proceed to Snapshot and then to onchain governance approval.

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